The Canadian dollar fell after last week?s credit scares and equity sell-offs continued to drive investors away from the riskier commodity currencies. Commodities, accounting for almost 50 percent of Canadian exports, are linked to the Canadian dollar and have increased currency volatility.
The strong Canadian currency, coupled together with the rising cost of raw materials, tugged down Canadian factory prices below analysts? expectations. Factory prices printed a decline of 1.3 percent, more than double the projected drop of 0.6 percent.
http://ca.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2007-07-30T123504Z_01_N30353528_RTRIDST_0_BUSINESS-ECONOMY-CANADA-INDUSTRIAL-COL.XML[I]Source: Reuters Canada[/I]
Canada?s 75 percent weighting in energy, raw materials, and financials is driving fund managers to move investments abroad to avoid volatility. Horizons BetaPro Funds conducted a quarterly survey, showing the 33 percent of managers that were bearish in the first quarter leapt to 50 percent in the second quarter.
[I]Source: Financial Post[/I]
Increased shipments of the raw material used in nuclear-reactor fuel helped elevate profits of the world?s largest uranium producer in the second quarter. Cameco Corp. posted a 36 percent increase in earnings of $204.9 million, up from last year?s $150.4 million.
[B]Currency Markets: USDCAD[/B]
The Canadian dollar fell after last week?s credit scares and equity sell-offs continued to drive investors away from the riskier commodity currencies. Commodities, accounting for almost 50 percent of Canadian exports, are linked to the Canadian dollar and have increased currency volatility. Morning economic data further sapped Canadian dollar strength, as factory prices crossed the wires with a larger-than-expected decline. Over the past couple of days, traders watched the USDCAD rebound almost 350 pips, but loonie bulls hope tomorrow?s GDP report will push the pair back towards parity. The USDCAD most recently traded at 1.0679.
[B]Equity Markets: S&P/TSX Index[/B]
After last week?s horrific performance, the S&P/TSX index began this week on a brighter note. The last quoted 63.13 point advance was led by natural gas producers EnCana Corp. and Suncor Energy Inc. picking up 73 cents and 89 cents respectively. Natural gas futures rose to $6.409 per million British thermal units, a 3.2 percent increase. The S&P/TSX was most recently quoted at 13,811.66.
[B]Fixed Income Markets: Canadian Government 10-Year Bond[/B]
The 10-year government bond declined as investors regained confidence from a reversal in the equity markets. Last week, risk-free securities were the investment of choice while gains in credit default swaps shook up stock markets around the world. The Toronto stock exchange had its worst week since September 2001, falling 5.7 percent. Investors trickled back into the equity market in attempt to get a cut of today?s newly found profits, pushing bond prices lower. The Canadian government bond was most recently quoted at 96.345, yielding 4.5 percent.